Delta Plans 20% Boost in Board as Directors Near ExitsMichael Sasso
Delta Air Lines Inc., facing mandatory director retirements later this decade, may create one of the biggest boards among Standard & Poor’s 500 Index companies.
Shareholders are being asked to boost the board’s maximum size by as many as three members, to 18, according to a filing today from the Atlanta-based airline. Delta now has 14 directors, one less than the current authorized limit.
Delta’s proposal, which will be up for approval at the stockholder meeting in June, comes as six directors creep closer to its age limit. Delta policy holds that after its 2016 annual meeting, no outside director may stand for re-election after age 72. The third-largest U.S. airline wants to bring in newcomers and season them before the exodus, according to the filing.
An 18-member board would be “highly unusual,” said Gary Hewitt, head of research for GMI Ratings, a firm that researches corporate governance issues. The average board size for a company with a market value of $10 billion or more is 11 members, and GMI Ratings starts raising questions when a board reaches 16, Hewitt said.
“The fewer people in the boardroom, the more accountable and focused the board members need to be,” Hewitt said.
The six directors will reach the mandatory retirement age from 2016 to 2018, said Betsy Talton, a Delta spokeswoman.
“If approved, increasing the number of the board members will provide flexibility for new directors to join prior to these retirements, allowing them to become familiar with Delta and its operations, the industry and workings of the board and its committees,” Talton said in an e-mailed statement.